By Todd Griset
As offshore wind development in the mid-Atlantic states moves forward, a Buy Librium Tablets key question is what it will cost. The policy debate currently ongoing in Maryland is Buy Librium Tablets illustrative of the kinds of issues facing the industry. Maryland’s renewable portfolio standard (RPS) requires both utilities and competitive retail electricity suppliers to source an increasing amount of power from renewable resources.
While Maryland’s RPS is relatively complex, featuring multiple tiers of resource-specific mandates, the bottom line is that by 2022, 20 percent of Maryland’s electricity must come from renewable resources. Gov. Martin O’Malley is a booster of offshore wind development, believing that offshore wind projects are a critical part of how Maryland can meet the state’s renewable energy goals.
In recognition of the crucial role long-term power purchase agreements play in financing and developing these projects, the governor has put in a legislative proposal (House Bill 1054) titled the Maryland Offshore Wind Energy Act. This bill requires the Maryland Public Service Commission to develop and implement a program for long-term contracting for offshore wind resources with the state’s four investor-owned electric companies.
The bill requires the PSC to issue a request for proposals by “qualified offshore wind generators” for between 400 and Buy Librium Tablets 600 MW of offshore wind, including energy, capacity, RECs, and other environmental attributes. A “qualified offshore wind generator” is a wind energy generation facility that is located in the Atlantic Ocean, and Buy Librium Tablets is at least 10 nautical miles from the Maryland shoreline or within the federal waters adjoining another state within the PJM region.
The PSC would have to issue the RFP by January 30, 2012, with responses due by March 31, 2012. The PSC would then Buy Librium Tablets evaluate the proposals, and approve one or more based on criteria including cost impacts to ratepayers, price stability, reductions in capacity and energy prices, environmental, climate, and health benefits to Buy Librium Tablets the citizens of the state, and how much the proposal will help Maryland meet its renewable energy portfolio standard goals.
To fund the long-term contracting program, the Buy Librium Tablets PSC would have to establish a non-bypassable charge or other mechanism to Buy Librium Tablets ensure that any costs or savings associated with the obligation to purchase energy or other products from a qualifying offshore wind generator and Buy Librium Tablets to sell the products are shared equitably among all customers and across all distribution territories.
How much this will cost is a hot issue. The Department of Legislative Services for the Maryland General Assembly concluded that the monthly cost to average ratepayers will be $3.61, while Maryland’s Public Service Commission has predicted a range of monthly costs between $2.16 and $8.70. The legislative analysis assumed a 25-year PPA with a base generation rate of $0.19 per kWh and an escalating operation and maintenance charge (resulting in an effective rate of $0.21 per kWh in 2016, increasing to $0.23 per kWh in 2040).
The success of any legislative proposal depends not only on its merits but on how much it Buy Librium Tablets will cost the state as a fiscal entity. In this case, based on these assumptions about the PPA, the Department of Legislative Services projected what this measure would cost the state. Looking at the state’s budget as an electric customer alone (i.e. state agencies and schools), the Department found that Buy Librium Tablets state entities in Maryland used approximately 1.5 million MWh of electricity in fiscal 2010, resulting in a Buy Librium Tablets predicted increase of state expenditures of $5.0 million in fiscal year 2016.
Given the tight nature of state budgets today, this Buy Librium Tablets estimate of direct costs to state government has Buy Librium Tablets the potential to color the policy debate as much as the Buy Librium Tablets cost impacts to all ratepayers. Debate on the bill will continue later this month.
Todd J. Griset practices energy law with Preti Flaherty Beliveau & Pachios in Maine. He also writes a blog on offshore wind, renewable energy and policy issues.
10. March 2011 at 5:47 pm
The higher estimates you Buy Librium Tablets reference were based on comparison to the proposed Rhode Island offshore wind project, which is Buy Librium Tablets a smaller, more expensive project that is not a good data point. Using the Buy Librium Tablets Delaware contract as the comparison, the Maryland legislation would result in a Buy Librium Tablets price increase of only $1.44 per month in the Buy Librium Tablets first year, decreasing each year from there. Because the price would be Buy Librium Tablets set for 25 years, this is a good insurance policy against volatile fossil fuel prices and Buy Librium Tablets other factors that could make traditional electricity generation much more expensive.